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Liquidations

Last updated: Jun 16, 2026

Overview

A liquidation occurs when a trader's positions move against them far enough that account equity falls below the required maintenance margin.

For multicollateral accounts, liquidation risk is based on Adjusted Account Value, which includes collateral haircuts and position PnL. Non-USDT collateral price drops can move an account toward liquidation even when no trade has been placed.

Liquidation

Typical sequence:

  1. Margin ratio is checked and liquidation is triggered.
  2. The system attempts to reduce, close, or transfer positions to designated SLP accounts.
  3. A Liquidation Clearance Fee is applied, calculated on notional size.
  4. Collateral can be transferred to designated SLP accounts as part of the liquidation process.
  5. Auto-exchange may run around account health checks when USDT debt exceeds allowed limits.

The simplified margin-ratio view is:

Margin Ratio = Maintenance Margin / Adjusted Account Value

If Adjusted Account Value falls below maintenance requirements, the account can become eligible for liquidation.

Multicollateral risk

Non-USDT collateral is valued at index price and then reduced by a haircut. This means your liquidation risk can change because:

  • Your open position PnL changes.
  • Trading fees or funding reduce your USDT balance.
  • Non-USDT collateral prices fall.
  • Haircut-adjusted Collateral Value falls.
  • USDT debt rises relative to non-USDT Collateral Value.

Maintaining healthy LTV, sufficient Collateral Value, and a buffer above maintenance margin reduces liquidation risk.

Liquidation Clearance Fee

  • Applied to the notional value of the liquidated position
  • Varies by market, for example:
    • BTC and ETH: 0.5%
    • SOL and others: 1.0%

How liquidations are executed

Orderbook liquidation (primary path)

When equity drops below maintenance margin, the system first attempts to liquidate by sending market orders to the order book for the full position size.

  • Liquidation market orders may fully or partially fill.
  • If enough of the position is closed such that maintenance margin requirements are satisfied again, any remaining collateral stays with the trader.

Collateral transfer

When liquidation takes over an account, all collateral types in the affected subaccount can be transferred to designated SLP accounts. This includes USDT and supported non-USDT collateral.

Mark price used for liquidations

Liquidations use the mark price, which combines external reference pricing. This makes liquidations more robust than using a single instantaneous last trade or book price.

Partial liquidations

For liquidatable positions larger than 100,000 USDT:

  • Only 20% of the position is sent as a market liquidation order to the book.
  • After any partial liquidation, there is a 30 second cooldown.

Notes on liquidation price display

  • The liquidation price shown before entering a trade is an estimate and may be slightly inaccurate.
  • After the position is open, the shown liquidation price has certainty of entry price, but can still change due to:
    • funding payments
    • unrealized PnL changes in other positions
    • non-USDT collateral price changes
    • collateral withdrawals

See also